A cynical commentary about developments in the South African financial markets and the incomprehensible activities and pronouncements of bureaucrats and politicians.

Friday, 13 January 2017

THERE’S THE LIGHT BUT WHERE’S THE TUNNEL?

The main concern in the
market about yesterday’s somewhat unexpected weak numbers from Woolworths is
that they don’t seem to have been unexpected for some shareholders. The price
started falling about a week ago, and so cries of “insider trading” are going
up. While the practice is deplorable and in fact illegal, it does happen, and
old hands in this business will be spending more time looking for the
opportunities created by the price move than in joining the hunt for the perpetrators.
The fact is that the deal system records are now so comprehensive that the accounts
involved will be swiftly identified. Less swift, however, will be the process
that follows. Somehow these thangs are always complicated!

The other fallout from the
results is that they are being taken as a sign that most retailers are finding
it hard to make money. This is despite the steady stream of other indicators
which can in certain lights be taken as showing signs of a recovery. The
simplest of these are of course share prices and so far this month some very tidy
gains are being chalked up. The pitfall for
the bulls however is that industrial and financial company earnings have been
declining and unless a massive turnaround emerges in the December year-end
results (for which of course the books are now closed) the headlines will begin
to shriek about negative growth. But buyers are known to be able to look far
ahead right through noise like that.

And so to the season of
university registration and folk who are not yet even students are already looking
forward to participating in protests and disruptions. Everyone else
particularly taxpayers and other elitist capitalists are very weary of this
nonsense and patience has already worn thin. The indignant warrior who converted
the money spent by the ANC for their 105th birthday celebrations
into potential university fee payments would be shocked to hear that actually a
bus ride to the city, a T-shirt , a large chunk of lurid cake and a stiff drink
for several thousand sounds like money well spent. At least it was quickly gone
and not supporting an ungrateful innumerate illiterate for months.

It will be interesting to
see how many official delegates we taxpayers will be paying for to attend the
snowy talk shop in Davos next week. Whatever else they managed to do there last
year, the world’s economic brains-boxes haven’t noticeably improved things for
the rest of us since then. With all the hot air that comes out of these
gatherings one could almost believe in global warming. This year though some
people will leave early – if even to pretend they have cracked the nod to
attend the Trump presidential inauguration.

The US president-elect is
already very entertaining to watch in action. He is proving to be just as
worryingly unconventional as many feared. He shows scant regard for how things “are
done in Washington” and is becoming adept at using the internet to speak
directly to his audience, bypassing the filtering and interpretation processes
of the usual channels. The “main stream media” are livid and pounce on the
inevitable mistakes and inconsistencies in his pronouncements. His fans however
love it, since it shows that he is a real person! Unfortunately, though he has
so far shown no sign of shrinking the size, costs and interventions of
government. For a state that has debt of almost $20 trillion one would have
hoped that a business man would be doing something about balancing the budget.
Maybe in the end, Trump won’t be all that different?

Oh and it seems that Slovakian
Maros Kolpak,was a goalkeeper in the second division of the German handball
league who managed several years ago to get a European court to allow him to
play in Germany after his visa expired. In some convoluted way, this ruling enables
the selectors to drop on-form South African born cricketers from the Proteas test
side. Really, politicians should get right away
from sport. Who are all those suits filling the plush padded seats at Wanderers?
But the good news I am told is that so
far this year the ‘bokke have not yet lost a game.